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RM Issue #030620

Publishers call for drug ads, end to GST

Changes vital for newspapers' long-term survival, they say;
Don't worry about convergence, Senate committee told

GRAHAM FRASER, NATIONAL AFFAIRS WRITER
Jun. 18, 2003. 01:00 AM
OTTAWA—Canada's newspaper publishers yesterday told a Senate committee studying the state of the Canadian news media not to worry about convergence or concentration in the newspaper industry — but that it should recommend cutting the GST and loosening restrictions on pharmaceutical advertising. "If newspapers are to maintain long-term viability, public policy must allow newspapers to adapt their business models to changing circumstances, including in potentially dramatic ways," Anne Kothawala, the president and chief executive officer of the Canadian Newspaper Association, told the Senate Committee on Transport and Communications yesterday. "No one knows for sure what business model or models are going to work best for newspapers 10 years from now, let alone 20 years from now," she said. "Some owners are effectively placing large bets that the future for successful newspapers will necessarily involve a significant degree of integration and convergence with other media." Other owners have a different view, she said, adding: "It is essential that different models be allowed to emerge, to grow, and to flourish or fade away as they will." Kothawala argued that personality and culture are more important for fairness and diversity than the corporate structure of ownership. "Indeed the debate around the newspaper publishing sector in Canada has always been couched as a structural one, but the real issue was the personalities of the owners," she said. "In the mid-'90s, the issue was about concentration of Conrad Black's properties. There was a great deal of angst, but at the end of the day even the critics would agree that Canadians have better newspapers, such as the Ottawa Citizen." Citing U.S. studies, she argued that television stations owned by companies that also own local newspapers did a better job of covering their communities than other stations, and were more than twice as likely to produce high quality newscasts. Instead of making recommendations on limiting convergence, she urged the committee to recommend ending the application of the Goods and Services Tax on reading material, and permitting the pharmaceutical industry to advertise prescription drugs directly to consumers. "The introduction of the GST on newspapers in Canada had a dramatic effect on national circulation," Kothawala told the committee. "Between 1991 and 1993, circulation in Canada dropped over 5 per cent." She said the decline in circulation was attributed primarily to the introduction of the GST, as earlier recessions had little impact on circulation. Kothawala also called for an end to the ban on the advertising of prescription drugs directly to consumers. "U.S.-style advertising that spills over every day is misleading," she said.



`The introduction of GST on newspapers ... had a dramatic effect on national circulation.' Anne Kothawala, CNA president



"That's why we're calling for a made-in-Canada solution that would allow for better access to accurate, reliable medical information." She argued that Canadians want what she called "balanced, regulated, clear information on prescription medicines" so that they could better participate in decisions on their health. "Legislation drafted half a century ago has lost all relevance in the modern information age, and the time for change is now." In addition, Kothawala urged the committee to address Canada's Access to Information legislation, adding that it would also be constructive "to insist on a culture of compliance by government departments rather than avoidance of (Access to Information) responsibilities." The Canadian Newspaper Association represents about 82 major Canadian newspapers, with the exception of those — the Sun Media chain and the Journal de Montr?al and the Journal de Qu?bec — owned by Quebecor, which recently withdrew from the association for financial reasons. Some senators were skeptical about Kothawala's call for loosening the limitations on pharmaceutical advertising. "There is always a tension between the public interest and the private interest, and we represent the public interest," said Progressive Conservative Manitoba Senator Mira Spivak. "You seem to be expressing the corporate interest." Kothawala replied that the publishers did not think American-style advertisements are appropriate, but conceded that there will be money involved. "There will be additional advertising dollars, and we don't think we have to apologize for that," she said. Similarly, her defence of convergence, concentration and cross- ownership left some senators unmoved. Senator Pat Carney said that CanWest Global's concentration of ownership has reduced the diversity of voices in the Canadian media. "Basically, you're getting one voice," she said. Kothawala disagreed, saying that local newspapers all stress local content. "The diversity of voices is still there," Kothawala said. Carney countered, saying: "I would suggest that concentration and the elimination of voices is one of the reasons for the decline in (newspaper) circulation."

Additional articles by Graham Fraser



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